Lufthansa Group Approves $1.2 Billion Growth Plan For Eurowings

2017-09-27

Lufthansa Group’s supervisory board has approved a €1 billion ($1.2 billion) investment to purchase and lease up to 61 aircraft for its LCC subsidiary Eurowings as the bidding process for parts of the insolvent airberlin continues.

The funds will be used to acquire up to 41 Airbus A320 family aircraft and 20 Bombardier Dash 8 Q400s. ATW understands the Q400s are currently operated by airberlin’s regional subsidiary LGW.

However, the aircraft acquisition depends on the successful conclusion of negotiations for the group to secure parts of airberlin, which filed for bankruptcy Aug. 15 after 29.2% shareholder Etihad Airways withdrew financial support. The investments would be financed from existing liquid funds.

Over the past few months, Lufthansa has obtained 20 aircraft operated by Eurowings under existing wet-lease agreement with airberlin; 15 have been acquired and five more are leased with a purchasing option.

Airberlin negotiations with its short list of bidders—which include Lufthansa Group and UK LCC easyJet—for parts of the insolvent carrier will continue through Oct. 12. Lufthansa’s bid for airberlin assets is focused on securing the 38 Airbus A319/320s it currently wet leases from the bankrupt airline. Besides LGW, Lufthansa is also interested in airberlin subsidiary, Austria-based NIKI and 13 Airbus A320s from airberlin’s fleet.

Subject to approval by antitrust authorities, the Eurowings Group can grow by up to 81 aircraft and is expected to require up to 3,000 additional jobs in the cockpit and cabin operations, as a result of the hiring and intended acquisition of companies within the airberlin group. Job advertisements and staffing have already started.

Lufthansa Group CEO Carsten Spohr said, “We now have the great opportunity to take a decisive step forward with Eurowings in Europe. The supervisory board and the executive board agree that we are determined to seize this opportunity. With the approval of an additional investment framework for the acquisition of aircraft, the necessary preconditions have now been met. For Eurowings, it will be a major challenge to cope with the rapid growth.”